Correlation Between Stepan and KWG Group
Can any of the company-specific risk be diversified away by investing in both Stepan and KWG Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Stepan and KWG Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and KWG Group Holdings, you can compare the effects of market volatilities on Stepan and KWG Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Stepan with a short position of KWG Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and KWG Group.
Diversification Opportunities for Stepan and KWG Group
Pay attention - limited upside
The 3 months correlation between Stepan and KWG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and KWG Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KWG Group Holdings and Stepan is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Stepan Company are associated (or correlated) with KWG Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KWG Group Holdings has no effect on the direction of Stepan i.e., Stepan and KWG Group go up and down completely randomly.
Pair Corralation between Stepan and KWG Group
If you would invest 5.52 in KWG Group Holdings on September 15, 2024 and sell it today you would earn a total of 0.00 from holding KWG Group Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Stepan Company vs. KWG Group Holdings
Performance |
| Timeline |
| Stepan Company |
| KWG Group Holdings |
Stepan and KWG Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and KWG Group
The main advantage of trading using opposite Stepan and KWG Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, KWG Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in KWG Group will offset losses from the drop in KWG Group's long position.The idea behind Stepan Company and KWG Group Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| KWG Group vs. Stepan Company | KWG Group vs. Hawkins | KWG Group vs. Origin Materials | KWG Group vs. Senmiao Technology |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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